During the 19th Century Africa dramatically fell behind in income and life expectancy and moving on to the 20th Century, Africa fell further. Africa experienced a fleeting boom from 1950 to 1980 in terms of GDP per head, which was short lived when Africa slowly declined into the 1980s. Many factors must be analysed as to why growth has failed to sustain in Africa, the main points that I will be studying include fractionalisation which can be seen as the levels of difference between the many ethnic, cultural, linguistic and religious groups which are abundant throughout Africa. I will also study the foundation of African economics; Agriculture, and how it was affected by the implication of trade and economic policies such as import substitution industrialisation - a policy advocating replacement of foreign imports with domestic production. My final point will analyse how geography has affected growth and I will tie in the inefficient transport systems in place in Africa. Once analysing these factors it is clear that the reason growth has failed to touch Africa cannot be attributed to one factor but must be based on the accumulation of interlinking factors.
Fearons' analysis of cultural fractionalisation shows that Tanzania, Democratic Republic of Congo, Uganda, Cameroon, Togo, South Africa and Madagascar are all present in the top 10 of the ethnic diversity ranking, these and many other African countries are also highly rated in the tables of linguistic and religious fractionalisation. “the average African country is more than twice as fractionalised as other developing regions.”. The heterogeneity of Africa has a significant negative effect on growth, in fact as Collier and Gunning go on to say this fractionalisation “accounts for 35% of Africa's growth shortfall”. This concept is also backed up by Easterly and Levine (1997); “ethnic divisions influence economic growth and public policies”. Africa's growth failings can therefore be importantly attributed the high level of ethnic diversity within its many countries, the high quantity of languages make it impractical and harder to trade with others and the diversity of religions and ethnicity can cause tension between differing groups which can result in Civil War. Any such resulting Civil War is a huge economic expense that has shown to be common in Africa, just in the 1990s 7 Sub-saharan African countries were engaged in it - and as Imai and Weinstein (2000) hypothesise “Civil war imposes substantial costs on the domestic economy. These wars are destructive of human lives and economic infrastructure” (pp.1) thus being a contributor to the lack of growth in Africa.
Despite the hugely detrimental effect that this diversity has caused in Africa it is shown that it has little to no effect in countries with full democratic rights, and it therefore shows a positive correlation with a lack of political rights. Paul Collier (2007) in his book ‘The Bottom Billion’ states that bad governance is one of the four traps that 73% of the poorest countries have been caught in. An article review, “Springing the Traps”, in The Economist (2007), mentions that the bad governance ‘trap’ is causing the poor nations of Africa to diverge from the rest of the world and inevitably “Will end in a ‘ghetto of misery and discontent’”. Poor governance can be accredited to the separation the government have from the people, as the governments that came into power in independent Africa “were drawn from a tiny elite of educated young men”. This separation of the government meant that the leaders didn’t understand the needs of the most prevalent economic sector that is agriculture, which resulted in the taxation of the agricultural sector to finance other sectors that proved more directly beneficial to the government - this means that poor governance has had a major contribution to why growth has failed to touch Africa.
The geography of Africa, and most importantly Sub-Saharan Africa, is unprecedented. “the most striking difference between Africa and other developing regions is in the proportion of the population in landlocked resource-scarce countries”, and as stated by Fate, McArthur, Sachs and Snow (2004) nine of the twelve countries with lowest HDI scores are landlocked. The effect of being a landlocked country is that it cuts that country off from sea-trade which is one of the largest proportions of international trade, and therefore is a significant economic disadvantage. As Collier (2006) touches upon, normally countries in this situation gain from ‘spillovers’ from better endowed neighbouring countries on an average of 0.7%, however in Africa the Growth spillover is “a mere 0.2%”. African countries therefore do not have the incentive to orientate there economies to integrate with these neighbouring countries.
Collier continues that “being landlocked is not a choice” and therefore these countries should be pushing any opportunity to expand trade such as through air or railway. It is however evident that Africa has not harnessed its opportunities to increase trade. Transaction, and therefore opportunities for growth, is a high cost in Africa due to the fact that “transport costs are high”. It is also noted by Jalilian, Ribe and Weiss (2000) that the transport sector in some African countries is insufficiently competitive. “The Francophone economies have handicapped themselves by maintaining Air Afrique as a high-cost operator”. The monopoly that Air-Afrique has found itself in has made it more expensive to trade or export goods which in turn has made these African countries considerably less desirable and more expensive places to invest, which has indeed contributed to the failings of growth to touch Africa.
The negative effect of the geography of Africa is noted by Adam Smith in the Wealth of Nations, “There are in Africa none of those great inlets… to carry maritime commerce into the interior parts of that great continent”. In short; Africa is devoid of good rivers. This means that the landlocked countries of Sub-Saharan Africa do not have the benefit of rivers for fast trade internally or for fast export to the coastal regions for international trade. The lack of good rivers for trade does not only have a negative effect trade but this and the other failings of the African transport sector have other negative externalities, such as the interference with growth by slowing the transmission of ideas and innovation. The reduced rate of transmission and communication conveys that the advancement of technology for industry through copying and learning by sharing is slowed and hence leading to an unnecessary inefficiency that can also be directly attributed to the lack of growth throughout Africa.
Africa has erratic, low levels of rainfall meaning that it is hard and risky to plan farming. However in Sub-Saharan Africa “1/4 of its regions population dwells in towns and less than 1/4 of GDP originates in industry”. So, despite the risk of farming in Africa, agriculture is the foundation of its economics. This means that agricultural policy must be effective and if it is implemented badly will have a detrimental effect on its economic growth, and this is exactly what happened. “Governments in Africa pursued policies of import substitution”. Policies of ISI in Africa advocated and enforced replacing imports with domestic production, this had a negative effect on development and growth as it protected large firms from international competition - whilst also allowing inefficient firms that under normal circumstances would have become insolvent to survive by “passing their costs on to consumers in the form of higher prices.”. As Bates goes on to mention in Agricultural Policy and the Study of Politics (1991) the weight of this cost was mainly taken on the shoulders of farmers as the largest consuming group as an indirect tax, which resulted in the reduction of incentives for productivity in the agricultural community. Although some farmers received subsidise as producers this did not span the entire community as only certain large farms who “had modern technologies and possessed political clout” would receive any kind of benefit.
To keep down and stabilise the costs that had arisen due to this new ‘tax’, some African governments implemented policies that created themselves as a monopsony. “Public agencies are by law sanctioned to serve as sole buyers of major agricultural exports”. They thought that by purchasing crops within their countries at enforced competitively low prices and selling them at higher world prices, they could keep the surplus and therefore benefit and fuel the economy. However, the preparedness of the these African governments to undermine the rural producers for economic gain backfired as it caused a discouragement of trade in agriculture and significantly reduced the incentives of farmers - which reduced the efficiency of the agricultural sector. This and other major inefficiency created by the poor agricultural policies has contributed to the lack of economic growth of Africa as a whole.
It is clear that economic growth has failed to touch Africa due to a series of interlinking reasons that are all eventually the fault of poor governance. The high levels of fractionalisation throughout Africa could be counteracted by strong and equal democratic rights. The geography of Africa is unchangeable and it is therefore down to the policies of integration, openness of the economy and the invitation of foreign investment to counteract the negative externalities of its geography. To conclude, lack of sustained growth in Africa is down to three main ideas that are geography, fractionalisation and the agricultural sector, however these three can be directly interlinked through governance.
Bibliography
Collier, Gunning, Journal of Economic Literature: Explaining African Economic Performance. (American Economic Association 1999)
Easterly, Levine, Africa’s Growth Tragedy: Policies and Ethnic Divisions. (The MIT Press 1997)
Collier, Africa: Geography and Growth. (2006)
Imai, Weinstein, Measuring the Economic Impact of Civil War. (CID Working Paper 2000)
Unidentified, Springing the Traps, The Economist. (The Economist Group 2007)
Faye, McArthur, Sachs, Snow, The Challenges Facing Landlocked Developing Countries, Journal of Human Development. (Carfax Publishing 2004)
Jalilian, Ribe and Weiss, Industrial development and policy in Africa: Issues of de-industrialisation. (Edward Elgar Publishing Limited 2000)
Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations (Unidentified publisher, 1776)
Bates, Agricultural Policy and the Study of Politics in Post-Independence Africa (Rimmer 1991)
Bates, Markets and States in Tropical Africa: The Political Basis of Agricultural Policies (University of California Press 1984)
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